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13 Sep 2013 12:09:58

Brazil's A-5 power auction contracts nearly US $9bn biomass & hydro power

Brazil's A-5 energy auction, held on August 29th by the Câmara de Comercialização de Energia Elétrica, contracted hydro & biomass thermal energy for a total BRL 20.65 bn/US$ 8.752bn.

The projects, which must commense operation by 2018, will sell power at an average price of 133.57 reais ($56.60) per MWh. In the second phase of the auction, the government sold the concessions of 647 MW of sugar cane bagasse and wood-fuelled biomass plants. The winning projects and developers included, Canto do Buriti, Campo Grande, Delta, Eldorado, Energetica Santa Helena, Raizen and Tanabi.

Speaking after the auction, Mauricio Tolmasquim, President of EPE - Empresa de Pesquisa Energética (The Brazilian Energy Research Company), said he considered the auction to be very successful. He highlighted the hiring of renewable sources as a positive aspect of the auction and further commented that a number of the winning biomass projects from wood chips "…are almost like natural gas power plants, since they generate throughout the year, at any time, not depending on crops as in the case of sugar cane. The fact that wood chips have become competitive is a good sign".

S&P forecasts Brazilian electricity demand to rise 4-5% over the next two years, an annual increase of 20,000-25,000GWh, which would require investments to build 3,000-4,000MW of new-generation capacity, and related transmission and distribution capacity, around US$8-10 billion in annual investment needed in the country's power sector.

The government’s energy plan sets a target of over 10GW of biopower by 2020. Though the majority of current bioelectrical output comes from sugar mills using bagasse as a bio-feedstock, this creates an issue due to the seasonal nature of sugar production and is encouraging the search for alternatives.
Eucalyptus breeds planted in Brazil, repurposed from pulp and paper uses, can provide just such a dedicated power feedstock. Companies like Energias Renováveis do Brasil (ERB) are trying to develop new, quicker growing varieties with more lignin. With proper utilisation of its forestry resources, Brazil could eventually provide a viable new source of wood pellets for the biomass power industries in Europe and Asia.
In 2012, ERB began a R$210 million cogeneration project with Dow Chemical, building a biomass energy plant near the Dow plants in Bahia state. The plant opens in October and will burn up to 150tn of eucalyptus a day to generate as much as 15kW a minute of vapour, helping Dow reduce local fossil fuel consumption by an estimated 200,000m3 a day.
With the opening of the first major wood-based cogen project and the strong success of biopower at the A-5 auction, it seems a tipping point might have been reached for biomass power in the country: moving beyond a convenient by-product of the sugar sector to a cost effective, sustainable and year round renewable power source.

ERB, Dow chemical, CCEE, EPE and representatives of a number of the winning projects listed above will be amongst over 50 industry leading expert speakers and 250 attendees at the Biomass Power & Pellets Congress and Exhibition in Sao Paulo on November 7-8. The only major conference in Brazil focused exclusively on the biomass power and waste-to-energy sectors, Biomass Power & Pellets is a one-stop-shop for understanding the intricacies of this massive, growing market and for fostering the key local business connections. Registration is open now at www.worldbiomasspower.com/brazil2013

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Amber Williams

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